16/05/2012 | Argentina further delays the dredging of a River Plate canal vital for Uruguay

Mercopress Staff

Argentina formally requested Uruguay to jointly audit the River Plate Administrative Commission, CARP for alleged corruption claims involving the maintenance of the Martin Garcia canal, and which emerged in the Uruguayan press.

Foreign minister Hector Timerman asked his peer Luis Almagro to look into the corruption claims in a letter delivered on Monday to Uruguayan ambassador in Buenos Aires, Guillermo Pomi.

The controversial issue derives from the ongoing struggle between the governments of Cristina Fernandez and Jose Mujica for the dredging and maintenance of the Martin Garcia canal, which is crucial for Uruguay’s exports of grains, oilseeds, minerals, paper and pulp, but which port of Buenos Aires interests see as a threat to its River Plate predominance.

The treacherous River Plate has two main canals, Mitre leading directly to Buenos Aires, and the Martin Garcia which runs parallel to the Uruguayan coast and leads up the Uruguay River shared by the neighbouring countries.

Uruguay’s rich agriculture area to the southwest of the country depends heavily on the port of Nueva Palmira which has become a leading terminal, even more important than Montevideo for commodities exports. However if dredging is further delayed the operational costs of the terminal will keep increasing as vessels can’t be fully loaded.

The powerful lobby from Buenos Aires strongly objects the development of a competitor just a few tens of miles away. This strategy has led to all sorts of last-minute additional impediments for a dredging understanding which is exasperating for the Uruguayan side, but since the River Plate is a jointly managed water way, both sides must agree, and Uruguay does not have the funds or political resources to proceed unilaterally.

Given the very serious claims published in the Uruguayan media referred to alleged acts of corruption involving the maintenance of the Martin Garcia canal, the Argentine government requests “a joint special audit of CARP in the next 24 hours” said the letter made public by Minister Timerman.

Argentina is naming the Auditing Office for the task and expects Uruguay to do the same with a similar competent institution.

Timerman in the letter argues that keeping to the commitments on maintenance and dredging of the canal is the intention of Argentina but “it is a priority to clear up the alleged irregularities described by the Uruguayan media”.

According to the Uruguayan media the Dutch company in charge of the maintenance of the River Plate canals (Mitre and M Garcia) RioVia offered one million dollars kickback to each CARP delegation to annul a new tender and instead extend the current contract as allegedly happened, but at a price well above other options.

Several Uruguayan newspapers published that during dinner at Buenos Aires Jockey Club, the former Argentine president of CARP, and former Deputy Foreign Minister Roberto García Moritan offered the president of the Uruguayan delegation before CARP and former ambassador in Buenos Aires, Francisco Bustillo a million dollars if he “played in favour of RioVia”.

Apparently Garcia Moritán also invited to the dinner RioVia CEO in Buenos Aires, but Bustillo left the meeting and sent a written report on the whole incident to Minister Luis Almagro. Although the name of the CEO did not figure it is believed it was Sergio Cetera, who represents Boskalis, the Dutch family that owns RioVia.

The Uruguayan government from the beginning was intent to put out to tender the dredging of the canal with the intention of replacing the Dutch company RioVia which is known to have become particularly ‘Argentine’ in its methods. Besides RioVia which has been operating in the River Plate since 1991, saw its contract expire in January.

RioVia’s price was 19 million dollars while a second Dutch company, Van Oord offered to make the same job for 9 million dollars. However the contract put out to tender and which had attracted four companies was finally suspended given the many objections from the Argentine delegation at CARP that the Uruguayan media insinuated had fallen prey to the RioVia temptation.

End of story the RioVia contract was transitorily extended, but instead of 19 million dollars, the Uruguayan side managed to bring it down to 15 million compared to the 12 million it was charging until last year.

This way RioVia finally imposed itself and will continue dredging for Argentina and Uruguay until the two countries can agree on the contract terms and conditions to put out to tender, and a winner is nominated, so as to dredge the Martin Garcia canal from 32 to 34 feet.

The Uruguayan side had to accept defeat reluctantly because maintenance of the canals is crucial both for Buenos Aires and Nueva Palmira. By the way the Mitre canal is kept dredged at 36 feet.

Last but not least the current president of the Argentine delegation before CARP, a career diplomat and close to Timerman, Hernan Orduna has been formally charged with fraud for allegedly mishandling funds for the organization of the XXth Ibero-American summit that took place in Mar del Plata, December 2010.